This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
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1. SF Holdings A/H Listing – Lower End Looks Digestable
- S.F. Holding (002352 CH), China’s largest express delivery company, is now looking to raise around US$800m in its H-share listing in Hong Kong.
- SFH is the largest integrated express logistics service provider in China and the fourth largest in the world. It has been listed on the Shenzhen Stock Exchange since 2017.
- We have covered the company and deal background in our previous notes. In this note, we talk about the IPO pricing.
2. Pony AI IPO – Autonomous Valuation
- Pony AI (PONY US), an autonomous mobility solutions provider, is looking to raise up to US$195m in its US IPO.
- As per Frost & Sullivan, Pony AI was among the first companies in China to obtain licenses to operate fully driverless robotaxis in all four Tier-1 cities in China.
- We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.
3. Kansai Electric US$3.5bn Deal Updates – Has Delivered a Decent Correction, as Compared to past Deals
- Kansai Electric Power (9503 JP) plans to raise up to US$3.5bn (including over-allocation) to partly fund its investment plans.
- In our earlier note, we talked about the placement and ran the deal through our ECM framework.
- In this note, we talk about the updates and share price performance since then.
4. DigiCo REIT – The Positives – Hot Sector with Built in Growth
- DigiCo REIT (DIGICO AU) aims to raise over US$1bn in its Australian IPO.
- DigiCo REIT (DREIT) aims to be a diversified owner, operator and developer of data centres, with a global portfolio and broad investment mandate across stabilised, value-add and development opportunities
- In this note, we talk about the positive aspects of the deal.
5. SF Holding H Share Listing (6936 HK): Valuation Insights
- S.F. Holding (002352 CH) has launched its H Share listing at HK$32.30-36.30 per share. Pricing will be on 25 November, and the listing on 27 November.
- We previously discussed the listing in SF Holding H Share Listing: Updates Point to Improving Fundamentals and SF Holding H Share Listing: AH Discount Views.
- Our valuation analysis suggests that the H Share listing range is attractive. We would participate in the listing.
6. SF Holding Pre-IPO: Deal Goes Live in HK, Company Hopes to Raise ~US$800 Mn, Less Than Anticipated
- SF Holding’s HKEX listing launched on Tuesday, November 19th; deal to be priced by 26th
- SF hopes to raise about US$800 mn, less than originally anticipated in financial media
- About one quarter of the offering will be taken up by ten cornerstone investors
7. LG Chem’s Tax Alarm: Pillar Two Tax Could Soar Next Year + LGES Block Deal on the Horizon
- The local market’s buzzing that LG Chem could face a 200-300 billion KRW tax hit from Pillar Two next year, with LGES ramping up U.S. production.
- LG Chem may be reconsidering its plan to sell 2% of its LGES stake, dropping ownership below 80%, shifting the tax burden to LGES instead of itself.
- Flagging this now—LG Chem’s tax burden looms. Consider shorting LGES or a long-short with LG Chem, plus prep for the 2T KRW block deal with the pre-disclosure process.
8. FineToday Holdings (289A JP) IPO: The Bull Case
- FineToday Holdings Co Ltd (289A JP) is a Japanese personal care business seeking to raise up to US$500 million. It will be listed on 17 December.
- FineToday has four product categories: Hair care, Skin care, Body care, and others. Hair care is the largest category, accounting for 49.0% of 9M24 revenue.
- The bull case rests on return to revenue growth, three-pronged growth strategy, top-quartile profitability and top-tier FCF generation.
9. Pre-IPO S.F. Holding (6936 HK) – Thoughts on Valuation and the Outlook
- One important reason S.F. chose to go public on Hong Kong stock market is due to financial pressure, which mainly comes from its heavy asset development model and internationalization strategy.
- Considering the discount of the H-share price versus the A-share price, if the IPO pricing is at the lower limit of the range, then the safety margin would be higher.
- In the short term, S.F. is better than JD Logistics, so its valuation should be higher than JD Logistics and industry average. Future valuation expansion depends on international business performance.
10. KDC REIT Placement – Accretive Acquisitions Should Garner Strong Support
- Keppel DC REIT (KDCREIT SP) is looking to raise S$600m (US$450m) from a primary placement. The proceeds will be used to acquire interest in two data centers in Singapore.
- The deal will be a large one to digest, accounting for 47 days of the stock’s three month ADV. That said, the acquisitions appear to be accretive to bottomline.
- In this note, we’ll run the deal through our ECM framework and comment on deal dynamics.
